Equipment Leasing and Financing

Equipment Purchase Decisions Purchase Options: * Should my company pay in Cash? * Would financing be best? * Should I lease? * Is one option better than the other? * What are the advantages? Let us help with Finance options.

Calculating Leasing Rates

$1.00  Buyout Upon Lease Completion                No Advance Payment

Leasing rates shown here are factors.  Multiply the factor times the amount of purchase this will equal the payment for the listed term. Most leasing companies will generally provide you with lease factors as a guideline.    (Example: 60 Month Factor .02064 X Amount $100,000.00 = a $2,064.00 monthly payment for 60 Months) Interest Rates and leasing:  A commonly asked question is. "What is the interest rate on that lease?"  Leasing rates are not interest calculated in the same way that Bank Loans are.     The prime interest rate does affect the lease rates, but they may not be used in the calculation.  If you need to calculate the interest rate of a lease just calculate the total of payments and deduct the original amount.      There is no interest credit for advance payment with a lease. In the example above, the total payment was $123,480.00 Or a total loan cost of $23,480.00.  Translated into a simple interest loan you paid an APR of Approximately 9.0%.      If you pay the lease off early, unlike a simple interest loan, you do not save any money or receive any credits. Please Note: Rates and information listed here are provided as a guideline. There are many factors that affect the cost of financing.  We would be happy to assist you with your equipment financing needs.

10% Buyout at lease closing.          No Advance Payment

10% Buyout requires a payment at the end of the lease term equal to 10% of the original lease amount. The monthly payment is generally lower than a $1.00 buyout.  This type of lease is good if buyer does not know for certain that they will keep the equipment. This payment is only required if lessee is keeping the equipment.

Bank Financing with 20% down

Bank Financing:  This type of financing generally requires a down payment. A down payment of 20% is the most common. Interest rates vary from bank to bank and are directly affected by the buyers' credit history. Typically, equipment loans are available with single digit interest rates at the present time. Loan Preparation for Bank Financing:  Loan preparation should not be overlooked.  Often equipment buyers select a new machine and then proceed to the bank for financing.  This is not a good idea in the current loan climate.  Prepare a business plan, carefully laying out the reason for this new purchase.  We can assist you with the "Purchase Justification Process"   Just good credit alone may not be enough to secure an affordable loan rate and terms. There are SBA loans available for Small Businesses. However get that financing option resolved and approved before you start deciding on specific equipment.  Remember that Banks are not in the printing business, they are in the lending and being repaid business.  Interest and fees are a banks final goal in a loan.  Therefore the better your presentation and business plan the better the bank will feel about your venture and their risk. Advance Payment:  Typically, there are no advance payment penalties with a simple interest bank loan.  This can mean considerable savings to the buyer if they intend to pay equipment early or before the loan term ends. With a simple interest loan you pay interest on the unpaid balance.  Example:   With a $100,000.00, 60 month 9% simple interest bank loan the pay off balance after 2 years would be $65,270.00 but if you had leased the same equipment your payoff would be $74,700.00 or $9,430.00 more. This factor does not affect the total cost of the loan when the loan goes full term.